Battle to Enforce Trademark Wax Seal on Liquor Bottles Finally Ends

August 18, 2010

Copying a single aspect of another company's packaging - even if the companies are not in direct competition with one another - may violate federal trademark laws. That difficult lesson comes courtesy of a recent court decision (Maker's Mark Distillery Inc., v. Diageo North American, Inc., et. al, 2010 WL 1407325 (W.D.Ky.) from the United States District Court for the Western District of Kentucky.

The case arose out of the adoption of the distinctive red wax seal used by Maker's Mark, a distiller of bourbon, by the makers of Cuervo tequila. Although no one is going to mistake whiskey for tequila, the court found that the use of that distinctive packaging element by Cuervo infringed the whiskey maker's trademark. Key issues decided in the case are:
- The dripping red wax seal famously used on Maker's Mark bourbon bottles since 1957, is "inherently distinctive...a unique mark used in an unusual way to draw in the consumer".
- The use of a similar seal by Casa Cuervo tequila (distributed by Diageo in the U.S. between 2001 and 2004, used worldwide between 1997 and 2005) violates the trademark Maker's Mark received on the wax seal in 1985
- Maker's Mark dripping red wax seal only served a decorative purpose, thus exempting it from being declared de facto functional and thus invalid under the aesthetic functionality doctrine
- Maker's Mark trademark has become "incontestable" under guidelines set forth in 15 USC Section 1605
- The trademarked seal was not "generic" under the test set forth in The Lanham Act 15 USC Section 1064(3)
- The seal was not diluted under the Sixth Circuit's prevailing test (set forth in AutoZone, Inc. v. Tandy Corp, 373 F.3d 786, 802 (6th Cir.2004)) famous enough or sufficiently generic to support Casa Cuervo's claim that the trademark was diluted and no longer valid
- The fact that the companies were not in direct competition (Maker's Mark selling bourbon retailing for around $24 per bottle, Casa Cuervo selling limited-edition tequila priced at an average of $100 a bottle), had hugely variant sales amounts and are not easily confused did not bar a trademark infringement claim
- Due to the fact that Maker's Mark is marketed to a specific audience (bourbon drinkers) and it by no means being the nation's largest whiskey producer, its trademark is not sufficiently famous so as to be diluted under 15 USC Section 1125(c)(2)(A)
- Estoppel of further infringement may be a sufficient remedy; punitive damages are not guaranteed in a successful trademark infringement claim

Thus, borrowing an element of another's design can create significant liability. Although the court labelled the question of infringement, a close call, this case provides a textbook analysis of the elements of trademark infringement and discusses a number of issues to be considered by companies bringing or defending themselves against trademark infringement claims. The laws governing these matters are complex and detail-oriented. When you have questions about one of these difficult cases, seeking the advice of an experienced intellectual property attorney is the first step toward protecting your company's rights.

Article provided by The McDaniel Law Firm, P.C.
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